Citing budget hole, Moody’s cuts NJ bond rating

Citing a "weakened financial position" stemming from revenue shortfalls, Moody's Investor Service on Tuesday announced it had downgraded New Jersey's general obligation bonds — the state's third such ratings agency downgrade since last month.

In a statement explaining the downgrade in the state's debt rating from Aa3 to A1, Moody's expressed concern with New Jersey's "recurring revenue shortfalls and ongoing reliance on nonrecurring resources that have deferred structural imbalances into future years."

Gov. Christie's administration recently disclosed an $800 million revenue shortfall in the current $33 billion budget for the fiscal year ending June 30. Officials have not yet laid out a plan to fill the gap.

Moody's also pointed to the state's "high and rapidly growing fixed costs" as a reason for the downgrade. Christie has focused on the state's rising pension costs recently, describing the rate of growth as unsustainable and calling for unspecified changes to the state pension system.

The downgrade follows similar actions by Fitch Ratings and Standard & Poor's, which also cited the state's revenue issues and pension liability costs as areas of concern.

The S&P downgrade dropped New Jersey's bond rating to a status above only Illinois and California among U.S. states.

- Maddie Hanna